All Forum Posts by: Kyle Wells

I've found Kansas City is a market that has a good balance of appreciation and cash flow. Thanks for sharing the article! Always nice to see what other areas could be an option for out of state investing. 

Does the builder have their own addendum with any language in regards to an increase in material costs resulting in a higher price? They are obligated to perform on the contract just as you are. If they are preselling homes, they should have already bought the materials before listing so they knew the costs of the home build. I had two clients get under contract in November and December on new construction that was completed in March and May respectively about 45 min north of Seattle and guess what, the builders didn't try to renegotiate, but my clients closed with over $100k in instant equity. Builder still hit their profit margins because they buy materials in advance and know what they need to sell for to hit their profit margins. It sounds like the builder shouldn't be doing presales on their homes. I would recommend having your real estate broker look over the contract with their managing and/or designated broker and give their opinion on the language. Your best bet is pushing for the builder to move forward with the build at the price agreed upon, asking them to buy you out of the contract for an amount that is fair given the damages (having to now buy in a more expensive market than you would have in December), or you can agree to some middle ground on an increased price that feels like a win/win for both sides. Otherwise, it would likely require legal action.

This scenario isn't specifically addressed in the management agreement. My thoughts were that the PM unilaterally decided not to enforcre the lease agreement, so they should eat the fee since they didn't collect the break lease fee, which would have covered the new lease fee and some. It just seems like a bad idea for the PM to set this precedent and curious what other investors have in place with their PMs for situations like this. Technically, the neighborhood is B- when I look it up online. It's lower income and some of our tenants are on voucher programs.  

Good morning BP community,

I have a scenario that I wanted to bounce off other investors as I need to set a precedent with my property manager and curious what others do in similar situations. Currently, I pay my PM a 50% new lease fee, 8% management fee, and $250 lease renewal fee. I have 9 doors under management with this PM. They recently placed a tenant in a C class property of mine and after 3 months they allowed the tenant to break the 12-month lease if they left the property in good condition/clean and he returned all but $200 of their damage deposit (used to change locks/clean property). My PM was able to re-rent the unit without any vacancy, but had put a 50% new lease fee on the monthly accounting. None of this was communicated to me and so I naturally questioned why a new lease fee was added. He offered to reduce it to a $250 lease renewal fee without me asking.

I can see how this can get out of hand and eat into my cash flow if it were to continue happening, so I'm looking to nip this in the bud with my PM. I would love to hear your thoughts on a good solution/process for the future.

Hey Greg, congrats on getting your license. I work out of the Windermere Office in Marysville and love the support I get there. I started out "part-time" as well as I transitioned from my finance job and they were completely cooperative with me. Let me know if you want to learn more about the office. 

Exp Reality is another good option that is more virtual with lower splits, but it sounds like you want something more in person.

Hey Mike, sorry just seeing this. I've been able to get my purchase price + rehab cost + carrying costs + refinance costs to about 80% of ARV. I'm usually refinancing with a 30-year fixed loan with a 70-75% LTV, so I've been leaving some money in my deals, but that's okay for me as it's still significantly better than buying turn key deals.

I have had some success with BRRRR. I still haven't mastered it to the point of getting 100% of my cash out, but I've gotten to the point where I can get to about 80% of ARV, which is fantastic. I invest in Kansas City and Seattle areas and both have their stengths and drawbacks.

I think it's a very powerful strategy. Do you have an area you plan to invest in? I mostly invest in north Snohomish County. I have an off market single family house available in south Marysville right now. 

Hi Elmer and welcome to BP! Personally, I would highly recommend selling your primary (tax free!) and househacking a duplex. You are killing two birds with one stone. 1. You significantly reduce your monthly living expenses, and 2. You get your feet wet on your first investment property that you will eventually turn into 2 doors. 

I also own three properties out of state (purchased 1 while living in Kansas City for 2 years) and it is more difficult to manage not being there. Even with a PM, they don't manage it how you would. I now focus on investing locally and focus on the North Snohomish County area as the demand is high and it's a booming area. I find it beneficial to buy in an area you know and that's convenient to you. Good luck!

Did the foundation engineer provide a permanent solution? Typically, you can hire a structural engineer to do an analysis and provide a permanent solution with instructions for a foundation repair company. I would recommend going that route and asking for the cost of the repairs in a seller credit. Otherwise, I would probably pass unless you're getting a smoking deal to where it still makes sense even if you have to fork out $10-20k down the road for repairs.

Jeffrey, FSBOs typically only go well when the sellers are very experienced in contract literature, marketing, and negotiations. Do your parents know what an escalation addendum and and 22AD is? Those are common forms being used in this market. Also, they're only "saving" the listing agent's commission. The buyer's agent will still expect their commissions (2.5-3%). Here are the ways a realtor will earn the sellers their commissions and more:

1. The realtor will pay for professional photos and marketing to increase the reach of the property.

2. The realtor will take on and significantly reduce the seller's legal liability. They will ensure the contract and addendum are written in a way that is fair to/benefits the seller.

3. The realtor will handle all communication and negotiations with buyer's agents. 

4. The realtor will have preferred vendors to recommend that will ensure a smooth closing and reduce the likelihood a transaction fails and has to be relisted.

5. The realtor will research buyer's lenders and know the questions to ask their lenders to understand their qualifications. 

6. Most importantly the property will actually be listed on the MLS and not just 3rd party site(s). The MLS is what realtors use to search for properties and information on the property.